A Controversial Solution to the Social Security Solvency Situation

Social Security is facing a funding shortage. It is paying out more money in benefits than it is taking in through payroll taxes. If nothing changes, its trust fund will be depleted within the next 10 years. At that time, Social Security will no longer be able to pay full benefits. Estimates are that retirement benefits could be slashed by more than 20 percent!

Certainly, no one wants to see that happen. That’s why many ideas are being floated on how to keep Social Security solvent. According to an article by 24/7 Wall St., current suggestions include eliminating the cost-of-living adjustment (COLA), which tries to ensure that benefits keep pace with inflation, and increasing payroll taxes. Obviously, those are not popular ideas.  

Divisive Idea

Another thought is to phase out or stop making payments to people with high retirement income. The article explains this plan, stating: “The average monthly Social Security payment is $2,002. People with active and passive retirement income of $5,000 a month would only get $1,000. Those with active and passive income above $10,000 a month would get no payments at all.”

Obviously, that idea is not popular either. People with high retirement incomes argue that they paid into Social Security, often for decades, and they should get their money back.

Better Solution

The Seniors Trust believes the best solution has already been introduced. We want Congress to enact the Social Security Expansion Act. This landmark bill buttresses the long-term solvency of Social Security by expanding benefits for seniors — not cutting them!

If passed, this legislation will make four major changes to Social Security for retirees:

• Benefits will be increased for most recipients by about $200 per month.
• The Consumer Price Index for the Elderly (CPI-E) will be used to calculate Social Security Cost-of-Living Adjustments (COLAs) instead of the Consumer Price Index for Urban Wage Earners (CPI-W) used currently. The CPI-E takes the unique spending habits of seniors into account — particularly regarding the cost of healthcare — and offers a more realistic COLA for retirees.
• The minimum Social Security benefits would be increased to provide higher payments to seniors and greatly reduce senior poverty.
• The long-term solvency of the Social Security program would be guaranteed.